US corn, wheat and soybean futures were all sharply higher again overnight. Probably a bit higher than where I would have picked them to be too, you take what you can these days, no one knocks back 8 years highs in wheat.
Corn was limit up again, the prospect of very low US carry over stock and talk of dry weather hurting the yield potential in the Brazilian crop triggered another round of technical buying. Looking at World Ag Weather models and rainfall history for Brazil one might come to the conclusion that the punters have overcooked the damage to the summer corn crop in Brazil a little….. but just a little. The key remains the sheer volume of Chinese feed grain demand and the pressure that will place on exportable stocks from the US and Brazil. Combining the weather issues and the additional demand is the driving force behind this rally.
Mato Grosso grows around 43% of the second corn crop, the one in jeopardy. With Mato Grosso do Sul to the south and Goias to the SE of Mato Grosso producing around 26% and Parana to the very SE about 20%. It is dry and will continue to be dry for the week or so ahead across the S/SE corn area. The major corn area has seen around 80% of its average 30 day rainfall and is forecast to see a little in the very north and not much more anywhere else in the week ahead.
The weekly US crop progress report was out overnight. US corn planting is lagging a little behind the 5 year average, especially in the western corn belt. The US farmer appears to be getting soybeans in first. Kansas wheat is 2% in head (5yr avg 12%) and crop condition rating for the US winter wheat crop fell 4% in the G/E rating from 53% to 49% giving wheat some fundamental fuel of its own.